Reward management is : Development, Implementation, Maintenance, Communication and Evaluation of the reward processes. These processes deal with assessment.

Reward management is :

Development, Implementation, Maintenance, Communication and Evaluation of the reward processes.

These processes deal with assessment of Relative job values, Design and management of pay structures, Performance Management, Paying for performance, competence or skill , Provision of employee benefits and pensions and Management of reward procedures

Compensation Means::

Counter Balance: To Makeup for : To Offset

The meaning is different in different countries:

In USA : In exchange for effort or work

In China: Necessity in life. Now it is Dai yu or How you are treated or cared

In Japan: is kyu-yo meaning giving something or given by ones superior.

Now in Japan it is changing to hou-syu which means reward and no association with superiors

Reward ManagementReward management is Development, Implementation, Maintenance, Communication and Evaluation of reward Processes.

This includes:

•Assessment of relative Job Values

•The design and management of pay structures

•Performance management,

•Paying for competence, skills, and employee benefits with in overall legal framework

Reward management is concerned with:

•Development of organisational culture

•Emphasizing core Values

•Influencing employee motivation and Commitment and

•Integrating individual with the organisation

Total returns in exchange of work

Total Compensation

forms

Relational forms

Indirect Benefits & Services

Direct Cash

LearningOpportunities

Short termBonus

Long TermIncentives

Base salary

Merit/Cost of living

Recognition &Status

Time awayFrom work

ProtectionProgramme

Services &allowances

Security

ChallengingWork

Total Reward Process

Non Financial Rewards

Job Evaluation

Market Surveys

Employee Benefits

Performance management

Business Strategy

TotalRemuneration

Pay Levels &Relativities

PayStructures

Reward Strategy

ImprovedPerformance

EmployeeDevelopment

PerformancePay

The pay Model

Strategic Issues

Consistency

Competitiveness

Contributors

Administration

TECHNIQUESSTRATEGIC

OBJECTIVES

Efficiency

Performance

Quality

Customer

Cost

Equity

Compliance

Market, Surveys, Policy Lines, Pay Structure

Work Analysis, Job Evaluation, Internal Structure

Seniority Based, Performance based, Merit Guidelines, Incentive Programmes

Planning, Budgeting, Communication, Evaluation

Reward Philosophy:

A set of Beliefs which underpin the reward strategy and govern the reward policies that determine how reward process operate

Reward Strategy:

Intentions of organisation on the reward policies processes and practices required to ensure that it has the skilled competent and well motivated people it needs to achieve its business goals

Reward Policies:

These provide guidelines for implementation of reward strategies and for the principles and for operation of reward management.

Reward Practices:

Financial and Non Financial rewards, job evaluations, external benchmarking, Pay structures, performance management and employee benefits.

Reward Philosophy covers:

Importance to pay as a motivating force

Use of non financial rewards, opportunity to learn, responsibility, recognition, quality of work life, Personal growth

Extent to which organization believes, rewards should be differentiated according to performance, skill or competence

The extent to which management believes that pay should be driven by Market forces

Significance of equity in relation to position and performance

Amount of flexibility allowed.

Reward Strategy:

Deliberate Utilization of the pay system as an essential ingraining mechanism through which efforts of various sub units and individuals are directed toward the achievement of an organization's strategic objectives.

How performance can be driven

Achieve change in culture

Individual and team contributions

Cost leadership

Reward policies:

Level of rewards

Relative importance to market rates and equity

Scope for use of contingent rewards

Employee involvement in design of reward system

Communication of reward

transparency

Four Strategic Policies

Internal Consistency:

Comparision among Jobs or skill levels inside an organisation.

Relative contributions to organisational Objectives

Does one contributes to satisfying customers and shareholders more than others

Does one require more skill or experience than other

This is a factor to determine pay rates both for employees doing equal work and for those doing dissimilar work

The pay Model

Strategic Issues

Consistency

Competitiveness

Contributors

Administration

TECHNIQUESSTRATEGIC

OBJECTIVES

Efficiency

Performance

Quality

Customer

Cost

Equity

Compliance

Market, Surveys, Policy Lines, Pay Structure

Work Analysis, Job Evaluation, Internal Structure

Seniority Based, Performance based, Merit Guidelines, Incentive Programmes

Planning, Budgeting, Communication, Evaluation

Four Strategic Policies

Internal Consistency:

Comparision among Jobs or skill levels inside an organisation.

Relative contributions to organisational Objectives

Does one contributes to satisfying customers and shareholders more than others

Does one require more skill or experience than other

This is a factor to determine pay rates both for employees doing equal work and for those doing dissimilar work

Reward management is also concerned with development of appropriate organizational culture, underpinning core values and increasing motivation and commitment of employees.

This covers both Financial and Non financial rewards.

Recent Developments in Reward :

•Greater emphasis on strategic reward and need to integrate reward policies with other key areas of people management

•approaches to Job evaluation

•Developments in performance management

•Broadband pay structures

•Competence related pay

•Individual and Team pay

•Increased importance of variable pay

Compensation philosophy:

Right reward processes are the ones which are right for a particular organization.

There can be a good practice but no universally best practice.

Gain sharing

Developments in Pensions and employee benefits

More devolution of pay decisions to line managers

•Pressure to treat employees as stake holders

•More attention to employee involvement in pay issues

•Greater focus on equal pay for work of equal value and discrimination in such areas a performance management

•Importance of understanding the culture, climate, environment and management practices in organization before before attempting any innovations

•Reward policies and practices can play a major part in Change programs to achieve strategic goals led by top management.

•Reward management involves the application of schemes and procedures with in pay structures.

•What matters most is not the design, procedure or structure of the scheme but the way it is applied, used and maintained and these are the process issues which ultimately determine the effectiveness of the organizations reward policies and practices

•Planned and managed incremental change is easier to design implement and sustain than quantum leap

•Philosophy needs to precede strategy and implementation. We need to be clear about what we are paying for and why before we design a scheme.

It is necessary to set clear short term and long term goals about what is to be achieved by reward management innovations. Some attempt must also be made to define critical success factors, and performance measures to monitor and evaluate progress.

Business

Strategy

Reward

Strategy

Pay

Structures

Pay Levels & Relativity

Total

remuneration

Improved performance

Employee Development

Performance Pay

Non Financial rewards

Employee Benefits

Market Surveys

Job Evaluation

Performance MGT

Base Pay:

Base pay is the rate for the job as affected by the internal and external employment markets.

Pay Level:

When performance pay and rewards for competence or skills or service increments are consolidated in base rate, it becomes Pay Level.

Size of cash bonuses, benefits , pension, PF are usually set in relation to the base pay.